UK Labor Market Cools Down In Q1

(RTTNews) - The UK unemployment rate edged up and wage growth softened in the first quarter ahead of the rise in payroll taxes, official data revealed on Tuesday.

The unemployment rate rose to 4.5 percent in the three months to March, in line with expectations, from 4.4 percent in the three months to February, the Office for National Statistics reported. Average regular earnings excluding bonuses grew 5.6 percent on a yearly basis in the January to March period, slower than the 5.9 percent rise in the preceding period. This was also slightly weaker than the expected growth of 5.7 percent.

At the same time, including bonuses, average earnings advanced 5.5 percent year-on-year, which was better than the forecast of 5.2 percent.

Payroll employees for April decreased 33,000 compared to the previous month and declined 106,000 from the previous year to 30.3 million.

The estimated number of vacancies was down by 42,000 from the previous quarter to 761,000 during February to April. This was the 34th consecutive quarterly decline. Data showed that an around 55,000 working days were lost because of labor disputes in March.

ING economist James Smith said hiring conditions are cooling, and this is very gradually putting downward pressure on wage growth.

That's good news for the Bank of England, though it will want to see a few more months of improvement before drawing any firm conclusions, the economist added.

With wage growth still stuck in the 5.5-6.0 percent range and energy prices set to drive up inflation to 3.5 percent later this year, this probably would not be enough to convince the Bank of England to diverge from its current pace of cutting interest rates once every quarter, Capital Economics economist Ruth Gregory said.